China’s Legal Battle With Filecoin Giant Exposes Pyramid Scheme

Key Points:

• China sues Filecoin company Shikongyun, alleging a $100 million pyramid scheme.
• A high-profile trial exposes pyramid selling practices, disrupting the economic order.
• A wider investigation into Filecoin firms underscores the government’s commitment to market transparency.

Shikongyun, a prominent Filecoin enterprise, is facing legal action as local Chinese prosecutors have sued the company for its alleged involvement in a pyramid scheme worth nearly $100 million, according to local sources.

The People’s Court of Pingnan County recently convened a public hearing to address the case against Lai Mouhang and four others. They are accused of orchestrating pyramid-selling activities exceeding 600 million yuan ($83 million) in value.

According to the public prosecution, the defendants established Shenzhen Space-Time Cloud Technology Co., Ltd. in June 2018. They aggressively promoted the investment potential of distributed storage technology and the economic model of filecoin.io, which involves a block reward system for miners.

Lai Mouhang, along with accomplices Liang Mousheng and Hu Mou, went on to replicate this model, creating the filpool.io platform of Space-Time Cloud Company. Under the guise of selling storage servers, they encouraged participants to mine fil coins and deceived them through promises of static income and other benefits.

The prosecution agency contends that Lai Mouhang and his associates established a hierarchical structure, exploiting high returns to entice participants to recruit others and thereby defraud them. This behavior has disrupted economic and social order and is considered a serious violation of the law.

This incident sheds light on a broader issue, as numerous Chinese Filecoin companies, including their founding teams, are currently under investigation by Chinese authorities.

The legal proceedings have been expedited, with court sessions resuming on consecutive days to hasten the trial process. During these sessions, both the prosecution and defense presented their viewpoints, and the defendant’s final statement was heard.

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